Don’t give GE $25m in tax credits
Use state funds to target blighted urban areas
I received a voicemail this morning from a machine tool manufacturer in Springfield. The owner was irate about a Boston Globe report describing tax credits the state has been negotiating with General Electric. He said he could hire new workers if the state would help him invest in new equipment.
I expect the governor’s office is fielding a lot of these calls. It’s hard to understand why an administration that has prided itself on investing for long-term growth ventured down this road. As a supporter of this particular tax incentive program – and a taxpayer – I’m also disappointed. I’d like to point out what I think is the true tragedy, which media coverage of this story has missed.
The Economic Development Incentive Program has one very straightforward goal. It was created to spur redevelopment in blighted urban areas. Funding is capped at $20 million annually. (The state was able to design a $25 million package for GE by spreading the credit out over six years). With just $20 million, paying companies to simply retain jobs is shortsighted. To generate real return on taxpayer investment, these tax credits must catalyze private sector activity.
If the state used these funds to encourage companies to move to these locations, it could have a real revitalization impact. One-time funding to catalyze growth and development on previously underutilized land is a more strategic use of taxpayer dollars. By helping these cities become stronger economic engines, public investment could lead to more productive regional economies and long-term job growth.If the state can’t resist the urge to shop for jobs, it’s got plenty of other funds to use. There are hundreds of millions of dollars in film, life sciences, and R&D tax credits. In contrast to these unproven programs, there is scholarly evidence that geographically targeted tax credits can contribute to urban revitalization when applied strategically. That’s why it’s so disappointing to see the state putting the limited funding available for struggling cities to such ineffective use.
Ben Forman is MassINC’s research director.